A First Look at Advertising with Amazon

I’m sure you remember my step-by-step tutorial on how to advertise with Amazon. Three weeks later, I have some preliminary results, which, as promised, I’m sharing with you, so that you can learn from my mistakes.

In a nutshell: I’ve failed. The experiment has so far been a disappointment, albeit one offering fascinating insights.

You may remember that I had done my math and knew that, to make any profit, I had to bid under the proposed $0.50.

Now, for a peek behind the scenes: whenever Amazon is about to show a product page, a small bidding war will rage for a few nanoseconds. Amazon will check to see if that product is linked to any ads. If more than one ads want to be displayed, they will bid for that space, until they reach their cut-off threshold. So, if I have specified 5c as my maximum, then an ad bidding for 6c will be displayed instead, and its owner will be charged that amount.

I had assumed a conversion rate (how many of the people who see my ad will click on it, and how many of them would actually buy the book) around 1%. This was based on my experience with Google ads, which I run for our Istomedia clients. The percentage of people clicking on one of our Google ads is usually between 3 and 7%.

If that were true in this case, each sale would require some 100 clicks, and each click would require another 100 impressions (views). So, you’d basically need around 10,000 impressions before you make a sale.

Conclusion #1: Target by product

I started my CPC bid, as this kind of bidding is known, low. Very low: at 3c, well under the suggested 5c. You may remember that I had run two campaigns. I had targeted one by product, and the other by interest. I immediately noticed that targeting by product was far more efficient. So much so, that a week later I terminated the second campaign and started a new one, targeted by product this time.

Conclusion #2: Bid high

This was my first failure. The second was that, even when targeting by product, too few impressions were made. I started increasing the bids, until I was over the 10c mark – twice as much as Amazon’s initial suggestion. I knew I’d make no money this way, as the ads would eat up any profits from my sales, but figured it was worth a shot.

This finally got me some traction, but I still had to raise the bid even higher to get any real kind of action.

Conclusion #3: Price matters

I was simultaneously running a campaign for a friend, who’s a romance author. Her campaign was about three times more successful than mine! She needed a 5c CPC bid to have the same results that I got with my 15c ones.

There were two differences between the campaigns: one was our genre. However, romance is one of the hottest genres, outselling fantasy, therefore it should have required higher bids, not the the other way around.

The second difference was that her book was on a 99c sale, whereas mine were full-price. Therefore I concluded that your book’s price matters a great deal. Everyone loves a good deal, and it’s practically pointless to advertise about a full-priced product (unless you want to raise awareness instead of making sales – more on that later).

Conclusion #4: Conversion rates are low

The final conclusion was that my initial estimate of a conversion rate of 1% was way too high. Indeed, it turns out the real figure was a mere 0.14%. In other words, it takes some 700 views before someone clicks on your ad, instead of a hundred!

I have no real data on how many people need to click before you actually make a sale, but I suspect it will be far lower than my initial estimate of 1%. If it were 1%, you’d need some 70,000 people to look at your ad before you made a sale. If, however, that, too, is 0,14%, then it may take up to half a million eyeballs before you even sell a book! Even with a low CPC bid of 5c, you will have paid $35 to make that sale. If said book sells for $0.99, then you will make 33c for every $35 spent. Include taxes, and you may end up with some 20c. Not exactly a stellar return on investment…

So, is it a bust?

In a nutshell, yes – as far as sales are concerned. A few months ago, I stopped advertising my books on Google because I spent too much for each sale. That’s been the case here as well – at least for me. Ideally, you want to get caught up on a virtuous circle, where your ad sales feed into your organic ones. By the term organic, I mean those sales you get from the “people who bought this also bought…” mentions etc. Amazon is really good at this, and it’s one of the pleasures of working with them.

As I ended up paying Amazon almost nothing, due to the poor conversion rates, perhaps the extra impressions would help raise awareness of my book, so that its organic sales would be helped. Or at least that’s how I consoled myself.

However, one of the first things I noticed was that my organic sales for the two books advertised plummeted as soon as I started advertising them. I can think of two reasons why this might happen:

Amazon is no longer promoting books organically, as it focuses on paid promotions

Amazon stops promoting organically books advertised, to make room for other books

Whichever the case, this was a shock to me. I’m used to selling a couple of books daily when not advertising. Selling none for days on end was a terrible outcome, even if I didn’t actually pay Amazon anything.

Use it wisely

As you may know, I’ve started selling my fantasy book Pearseus: Rise of the Prince for 99c. As I want to raise awareness to the fact, I will advertise it with Amazon. However, I will do it knowing I will end up paying through the nose for each sale. The real benefit will be the huge number of people who will have caught a glimpse of the first book in my series by the time my $100 budget runs out – perhaps as high as 1,5 million eyeballs. This will raise awareness, and hopefully help make readers buy the rest of the Pearseus series as well.

To make sales, however, I will advertise it on other places. For example, when I last advertised with Book Gorilla I made 29 sales for my $50. Even better, ENT gave me 28 sales for only $15 (I am preparing a joint post with the lovely Tara Sparling on the subject of paid ads and which ones offer best value for money, so stay tuned).

Obviously, this is a far better outcome, if you’re interested in sales. If you’re interested in raising awareness for your book, however, you may still wish to give Amazon a serious look.

Either way, I’m looking forward to hearing about your experience with paid promotion!

Update #1

Author CJ Heath has shared the following information, in response to my post:

“I have run an advertising campaign on Goodreads with CPC. I ran a six day campaign with $15. I played with the price of CPC and averaged 63c a click. My book was seen by 27,000 people. 13 clicked through and judging by my sales, 10 bought.
My first campaign (when my book launched) cost $60 at 70c. It was viewed by 143,000 people and 87 clicked through with sales in the high 70s.”

The above numbers suggest that:

My CPC bid was too low to make a difference. It needed to be some ten times higher.

My estimates as to how many people buy the book once they click on the ad was way too conservative. Heath seems to have had a number closer to 80% – much higher than my assumed 1%.

I will now head over to AMS and adjust the bid, as I just started a campaign to push Rise of the Prince, at the new price of 99c.

Update #2

This is what Chris McMullen, our resident authority on all things Amazon and the man who has literally written the book on it, has to say:

“AMS ads are intriguing. I’ve now run 13 different ads, but still need more data to draw significant conclusions. I can say that 0.1% clicks-to-impressions is typical; I have hundreds of thousands of impressions to show that. I don’t have enough sales data to for a good estimate of sales-to-clicks. I’ve seen a couple of my ads exceeds 10% here, but that’s been the exception. I don’t have enough data for that to be statistically significant. I think it’s a good measure, though; if sales-to-clicks is well above 1%, it’s a good sign; if not, something’s wrong (product page, content, topic, targeting). That could be valuable info.

Clicks-to-impressions really don’t matter. You only pay for clicks, so wasted impressions don’t cost you. The problem is that it’s not easy to make a ton of impressions. So if you’re trying to generate significant sales frequency with the ad, the limited impression rate and click rate will make that a challenge.

For most of my ads, my sales actually went up, and I mean sales not reported with the ads. Even paperback sales went up at the time. Amazon is still promoting books like they had been; I’ve been on Amazon enough to see that, and still see the usual marketing emails. I suspect that the ads can generate indirect sales. In my case, customers seeing the ad are more likely to buy the paperback, and that won’t show on the ad report.

The ad reports were screwy the past few days. Numbers were going down. How is that possible? It got so bad, Amazon put a message above the reports briefly. So I’d say the data for the past few days isn’t reliable. It looks like it may have been fixed today. But there are also delays, and numbers are still growing for ads that have been paused for days. Sales themselves may be delayed for up to 14 days in the report. Cross your fingers; things might look slightly better than they do now.

These ads don’t seem to be quick or easy, but they probably have value to series authors, authors running hot promos, supplementing external promotions and marketing, better-known indies waving a flag, etc. The trouble is that short-term ROI can be dismal, and it’s hard to gauge long-term potential; and there are unique situations where that long-term is more apt to pay off.

Remember, the tool is new, everyone is eager to throw money at it, the bids are high, the impression rates are low. In time, things may be different. I have reason to believe the tool will change in the coming months.”

91 Comments

Andy Crossfield
on August 24, 2015 at 19:23

I was wondering if you noticed any value in following the Kindle Edition Normalized Pages (KENP) Read graph. It seems to be a slight predictor of my sales, and was wondering if your experience was the same.

I’m bumming out majorly. I’m spending money I shouldn’t for my AMS campaign with only 2 sales so far.

Like you, I started cpc low without result. After playing around with different campaigns, I’ve found that to win bids you must bid high and increase your budget even if you have no intention of spending it all. So now I get more clicks but sales/cpc ratio isn’t worth it at all.

I even suspect that the big boys are hiring “clickers”, to make Indie authors, targeting their higher ranked books, exhaust their budget faster. Just like trolls for hire all over the internet, there’s no way of differentiating legit clicks.

Clicks vs sales ratio % is so low, I can’t help being suspicious when my reviews are very good. Why would anyone click on an ad where they already see the Title, ratings and price, and not buy the product? I’m not expecting 100% conversions but 60 clicks and only 2 sales is mind boggling to me. Shouldn’t Detail Page Views match the number of clicks? Or is DPV only counted by Look Inside clicks?

I think that, Amazon should give credits in the rankings for every clicks even without a sale. This way if mean spirited clickers are wasting your clicks, at the very least, you get credit for ad effectiveness and move up the ranks.

. . . and then there is serendipity. By chance I saw The Runaway Smile, and because it was free to read, I did. The quality of the concept, the writing and the presentation did all the rest and turned this peep into a sale for Nicholas, plus a bit of online praise. So if a unit sale of 1 counts at all, put this into the data. New column, Serendipity.

I began an Amazon campaign a few weeks ago, with essentially the same results as you (slightly different numbers, but same general idea). However, I’m fascinated by your suspicion that Amazon stopped promoting your books organically when you began paying for advertising because that does actually also match my experience. Now, to be fair, I saw that my sales were slipping beforehand, which is why I began advertising, but they really have tanked even more since I began the program. Hmmm…! I’m going to test this out by terminating my campaign right now – I’ll let you know if anything happens!

I should probably also mention that I’ve had better luck pricing my books at 2.99 rather than trying for 99 cent sales. When I do a 99 cent sale it is for a limited time. It sells okay, but does not give the book as much visibility as it used to.

That’s interesting. A number of sources say that free and 99c are still the most popular groups. Although I guess they are referring to permanent prices; not temporary sales. In which case I agree; neither free nor 99c sales carry as much weight nowadays, due to the sheer volume of titles on offer for those prices.

Thanks for the interesting post on the ads. I do think that Amazon is showing indie work much, much less–ads or no. When they renegotiated with the big boys, part of that was to sell them ad space (that they used to get for free). There’s a lot of competition out there. I’ve had much better luck keeping my sales steady by not joining Amazon exclusive program. It’s a long haul to build an audience, no matter HOW you do it, but I sell decent on other platforms and get a wider distribution (other retailers include Kobo, Google Play, B&N and Smashwords).

Sales for any author are not going to be what they were in early Kindle days. I appreciate the insight you and the commenters provided!

One of the questions I ask with any promotion, beyond impressions and sales (or giveaways,) is whether I found new readers or reconnected with existing ones. Did anyone post a new review or a comment? That takes time because even after acquiring a book it may take time for a reader to begin it.

So, if a promotion cost, for example, $50 and I gained 3 or 5 or 8 new readers some of who try my first book and go on to read the rest of the series, perhaps it was worth it. Does anyone have that of that type about the ads or promos on ENT, Gorilla, etc.?

Thanks for sharing your excellent investigation on ads. Every time it’s promo time for me I start investigating new avenues, hoping to find a magic formula. I look forward to your new post on new ad discoveries. I’m trying something new myself in a few weeks, if it’s good I’ll be happy to share. 🙂

Sorry to hear your experiment didn’t work out. Thanks for the transparency though. It sounds like you’ve learned a lot, and knowledge is worth so much. I really appreciate you sharing what you’ve learned.

AMS ads are intriguing. I’ve now run 13 different ads, but still need more data to draw significant conclusions. I can say that 0.1% clicks-to-impressions is typical; I have hundreds of thousands of impressions to show that. I don’t have enough sales data to for a good estimate of sales-to-clicks. I’ve seen a couple of my ads exceeds 10% here, but that’s been the exception. I don’t have enough data for that to be statistically significant. I think it’s a good measure, though; if sales-to-clicks is well above 1%, it’s a good sign; if not, something’s wrong (product page, content, topic, targeting). That could be valuable info.

Clicks-to-impressions really don’t matter. You only pay for clicks, so wasted impressions don’t cost you. The problem is that it’s not easy to make a ton of impressions. So if you’re trying to generate significant sales frequency with the ad, the limited impression rate and click rate will make that a challenge.

For most of my ads, my sales actually went up, and I mean sales not reported with the ads. Even paperback sales went up at the time. Amazon is still promoting books like they had been; I’ve been on Amazon enough to see that, and still see the usual marketing emails. I suspect that the ads can generate indirect sales. In my case, customers seeing the ad are more likely to buy the paperback, and that won’t show on the ad report.

The ad reports were screwy the past few days. Numbers were going down. How is that possible? It got so bad, Amazon put a message above the reports briefly. So I’d say the data for the past few days isn’t reliable. It looks like it may have been fixed today. But there are also delays, and numbers are still growing for ads that have been paused for days. Sales themselves may be delayed for up to 14 days in the report. Cross your fingers; things might look slightly better than they do now.

These ads don’t seem to be quick or easy, but they probably have value to series authors, authors running hot promos, supplementing external promotions and marketing, better-known indies waving a flag, etc. The trouble is that short-term ROI can be dismal, and it’s hard to gauge long-term potential; and there are unique situations where that long-term is more apt to pay off.

Remember, the tool is new, everyone is eager to throw money at it, the bids are high, the impression rates are low. In time, things may be different. I have reason to believe the tool will change in the coming months. Thank you for sharing your experience with this tool. (I’ll share some data once I have enough.)

What a shame it didnt work out! I’m so sorry! But thanks for sharing the results.

I’m so disappointed with Amazon lately. Although I will always be grateful for the opportunity they have given me to publish, it seems that everything new they have introduced lately hurts Indies in some way,,although its all wrapped up so prettily in promises and nice words. I know they are a business at the end of the day, and what they do has become solely about them. I kind of get the feeling that they are maybe feeling the victim of their own success, and that they’re trying to get rid of the Indie dross they have become plagued by. A lot of readers dont like having to wade through all that to find their next decent read, so they are doing everything in their power to keep their readers while having a bit of a ‘clear out’ of Indie authors.

I wondered about that. The higher book prices may be because they want their readers to feel like theyre getting value for money on the Kindle Unlimited scheme. If that is so, they wont want 99c cheap price low quality stuff any more. Its a complete reversal of what they were encouraging previously! And a very subtle way of going about it. In the long run, that must be good for genuine writers, right? We can charge a reasonable price for our work, and Indies wont be associated with bad writing anymore. But I guess it will be a painful transition… if it is successful!

I just wanted to thank you for your candor and honesty with your advertising via Amazon. It’s complicated, to be sure, and I am sure somewhere behind a super-secret hidden door there is Amazon making a ton of money. 😉 I think I will consider alternatives.

Fabulous post, Nicholas, but yep, this is a toughie. Not only the bounciness of click rates and conversion rates, but trying to take into account genre, the effect that cover design and title will have on people’s propensity to click, not to mention the fact that there’s no reliable demographic data on who is viewing the ads on the first place… where the hell is Don Draper when you need him?!

Still, as you mentioned, I do have a few graphs in the pipeline. That always soothes my data habit (momentarily).

Initial results are both baffling and disappointing. 6 days into the my campaign and I only have a single impression and 0 clicks. Yesterday, I raised the CPC bid to $0.16/click and I still have no additional impressions.

A few minutes ago I raised the bid to $0.20/click. I’m beginning to wonder how high we have to bid for an ad to appear!

I’ll be able to answer that in a week or two, but my preliminary data show that an average CPC of 62c gives me some 2,700 daily impressions, or 57,000 in 3 weeks.

Naturally, the high CPC cost means that I sold $3.84 worth of books by spending $25, but the idea is that you do this for the brand building; not for sales (something I’ll be posting more about on March the 8th).

Not related to amazon or cpc but I’m planning on using https://www1.ingramspark.com/ to try and get my books into stores. It means a dramatic cover revamp to appeal to retailers but with cost in the region of $60 to potentially reach 39,000 stores, has to be worth a shot 😉

I did a campaign at the minimum and have seen absolutely nothing so far, which makes me think the minimum is useless. I wonder if a lot of people are going full throttle on there, so the advertising pool is being dominated. It’s a new promo venue and people want to be the top dog, so maybe things will settle down eventually. Still that minimum is way too low to do any good.

I really hope Amazon isn’t dropping the organic promotions of books. If so then that’s going to hurt a lot of indie authors who aren’t able to spend a lot on the promotions. Also those that fail and never try again. I might attempt another go with my 1st book at a later date and go much higher with the bidding amount. Yet I can’t say I’m really impressed here. It seems very much like luck is part of the equation and that’s in regards to one being up against those that aren’t willing to drop $5 per ad.

True enough. I don’t think they’ll drop organic promotion altogether, since The Power of Six sold its normal half-dozen copies. This suggests to me that it’s the book promoted that lose their organic mentions, which kinda makes sense, I guess.

I’ve not touched this particular cpc market but I have run an advertising campaign on Goodreads with cpc and it’s not been huge but it’s been fair. I ran a six day campaign with $15. I played with the price of CPC and averaged 63c a click. My book was seen by 27,000 people, 13 clicked through and judging by my sales, 10 bought.
My first campaign (when my book launched) cost $60 at 70c viewed by 143,000 people and 87 clicked through with sales in the high 70s.
It wasn’t cheap, my profit margin was seriously low but it got my book seen.

Would I do it again? Probably not 🙂
Painful isn’t it? Sad to hear your cpc was a bust but thanks for sharing the information 🙁

Those are fascinating numbers, than you so much for sharing them! It means the click/buy ratio is almost 80%, which is phenomenal (obviously you’ve done a great job with the blurb).
A 63c bid is huge, compared to the 5c one Amazon suggests, so it may make sense my ads have flopped so far. I’ll try doing it your way next time, by significantly raising the bid.

It was a huge gamble on my part but I set a daily limit and reviewed how well it was going a few times a day. If I was getting clicks without purchases I’d have significantly dropped the price.
I also made sure the clickable advert was clear cut to ensure only those interested in the principle of the story would follow it through and tailored it to specific genres that fitted my book.

Hi Nicholas – sorry to hear about your advertising wows 🙁 If it is any consolation, the last time Amazon asked me to recommend a book to other readers, I had no hestitation in recommending Pearseus and I also mentioned that Vigil had just come out. Hope it will help your sales a bit more.

I am not surprised by this outcome, Nicholas, and you shouldn’t beat yourself up. A friend of mine who writes murder mysteries said her own experience was a disaster too. Also, other friends used this charge-by-click type of ad on Goodreads and the pay off was bad there too. I have come to think that this advertising practice is highly complex and unpredictable. As you say, it takes hundreds of views for someone to click on the ad, and the other thing is there is a plethora of books out there to compete against. My mind boggles just thinking about it and if, as you say, the book is fully priced, it doesn’t look good at all. Last, there is the factor of the genre as you say, but also, I believe the ‘eye-catchiness’ factor of the cover. It’s chaotic a system. I feel much happier advertising with big sites like ENT or FKBooksandTips.

I guess one should distinguish between marketing to build one’s brand, and advertising to make sales. The former is a long-term game, and Amazon’s ads may play a role there. The latter is a short-term win, to boost one’s confidence if nothing else 🙂

What a downer! Sorry it didn’t work out for you. I haven’t had much luck with my one little book except through ENT and I can only do that quarterly and when I put the price down to 99 cents. I’m writing for fun. I can’t imagine what it must be like for people who are trying to make a living at this. How do people do it?

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